Integer Programming, Linear Programming and Capital Budgeting.

This article reviews the formulation of the constrained capital budgeting problem. The article compares the merits of integer programming and continuous linear programming as methods of solving this problem. The paper discusses capital constraints and the question of an appropriate objective function. Additional constraints are presented and problems arising because of the binary nature of capital projects are discussed. Some attempts have been made to include probability considerations in mathematical programming approaches to capital budgeting.